Renowned investor and hedge fund manager Michael Burry revealed new bearish bets against two of the market’s top AI stocks, Nvidia (NVDA) and Palantir (PLTR). In its latest quarterly filing, his hedge fund, Scion Asset Management, disclosed put options on both companies, signaling skepticism toward the AI-fueled rally that has driven their shares higher this year. In pre-market hours, NVDA shares are down 2.4%, while PLTR has fallen 7.4%.
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For context, Michael Burry is a renowned investor and hedge fund manager best known for predicting the 2008 housing market crash, as portrayed in the book and film The Big Short. He is known for his bold, contrarian bets in the financial markets and recently warned about an AI Bubble.
Burry’s $1.1B Bet Against Nvidia, Palantir
In a quarterly filing, Scion Asset Management revealed that it holds put options on 5 million Palantir shares and 1 million Nvidia shares, worth about $1.1 billion in total. These bets would gain if the stocks fall, making up about 80% of Scion’s $1.38 billion portfolio.
Notably, a put option is a type of contract that lets an investor sell a stock at a set price before a certain date. Investors usually buy put options when they think a stock’s price will go down.
What Could This Mean for Investors?
Nvidia dominates the AI hardware market, driving data centers and autonomous vehicles, while Palantir stands out in AI software for government and enterprise clients. So far this year, PLTR stock has surged over 170%, and NVDA is up 54%, fueled by AI hype. However, now Burry seems to be betting that the rally has peaked.
Burry’s bearish bets suggest he believes Nvidia and Palantir are overvalued after their massive rallies. For investors, it could be a warning sign to stay cautious, especially as high valuations leave little room for error if growth slows or market sentiment shifts. However, others may view it simply as a short-term hedge rather than a signal of an impending crash.
The filing, released 11 days early, came shortly after Palantir reported 63% revenue growth to $1.18 billion for Q3. However, PLTR stock is trading down as the company’s high valuation meant even solid numbers weren’t enough to satisfy expectations.
NVDA or PLTR: Which Stock Offers Higher Upside, According to Analysts?
Using TipRanks’ Stock Comparison Tool, we have compared NVDA and PLTR to see which stock offers higher upside to investors. Nvidia stock currently holds a Strong Buy rating, with an average price target of $237.86, implying an upside of 15% from current levels.
On the other hand, PLTR stock carries a Hold consensus among 16 analysts. Palantir’s average stock price target of $155.44 suggests a downside of over 25%.
